JUNE 20 16
SIT EC y POL
….
HILLARY’ GLUTTONY FOR
MONEY DOESN’T HAVE LIMITS
MAKE MONEY FROM UNDOCUMENTED MIGRANTS JAILED IS HORRIBLE
“93% of the people
who are locked up in the U.S. in order to meet the minimum legal requirements must
be locked up with possible violations of U.S. immigration laws: they are locked in for-profit prisons, which are owned by
corporations that heavily fund a few politicians, including Hillary Clinton
“On 6 October 2015,
Vice News revealed that fact when they headlined “How
Private Prisons Are Profiting from Locking Up US Immigrants”, and showed that Hillary Clinton was by far the top recipient
of funds from Corrections Corporation of America, and that Marco Rubio
was by far the top recipient from the other of the industry’s giants, GEO
Group, and that both candidates had raked in around the
same total amounts from the industry. Furthermore: “The political contributions
are the visible tip of the iceberg of the influence these folks
wield.”
….
….
NOTE: OF COURSE WE ALL
WANT A LADY AS PRESIDENT.. BUT NOT THIS
ONE
WE WILL HAVE IT IN 5
YEAR of EXPERIENCE WITH SANDERS’ ADMINISTRATION
JILL STEIN and ELIZABETH WARREN WILL BE READY TO TAKE THAT
JOB
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ZERO HEDGE
ECONOMICS
In a DB note over the
weekend titled the "Illusory Benefits of Cheap Money" the
author Oleg Melentyeb turns his attention to relative performance in broad
equity benchmarks. Surely, Oleg writes, "easy monetary policy now coupled
with direct involvement by central banks in pushing down the price of credit
risk, equity performance distribution must be in direct proportion to those
efforts." He finds something unexpected: "Wrong, the answer is exactly the opposite."
To prove that he
shows the charts below which depict relative performance of US, EU, and Japan
broad equity benchmarks against the MSCI World index (MXWO) since Jan 2008. The
timeframe here was chosen to fully capture the period of extraordinary central
bank activity around the globe.
DB's conclusion:
if the central banks behind extreme policy measures have
little to show for the risk they have taken on their balance sheet to this
point, and the pressures they have subjected their savers and financial
institutions to, why should we expect such actions to be extended much further
into the future? Any benefit of additional central bank accommodation appears
to have been largely exhausted at this point in the cycle.
If that is indeed the case, it is much more likely that a
year from now we would see those programs on their way to curtailment rather
than further expansion. Fundamentals would once again prevail over technicals,
just as they always do over time. Recent market moves suggest investors are
beginning to position themselves accordingly in anticipation of such an
outcome.
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IMAGINE... WHAT IF
SND THEN IMAGE WHAT MIGHT HAPPEN NEXT...
1- Imagine the collapse of an extended
speculative tech bubble, resulting in a broad economic recession.
2- Imagine that investors found the
higher yields they sought in mortgage securities, which had historically
always been safe, and that Fed policy inadvertently created voracious demand
for more of that debt.
3- Imagine that this Fed-induced
yield-seeking speculation changed the dynamics of the housing market,
and produced a bubble in home prices, coupled with overbuilding and
malinvestment.
4- Imagine that this
second speculative bubble collapsed anyway, producing the worst economic downturn since the Great Depression, and
that persistent easing by the Fed failed to stop any of it, just as it failed
to do so during the preceding collapse.
5- Imagine that the Fed violated the existing provisions of section 13.3 of the Federal
Reserve Act (later rewritten by Congress to spell it out like a children’s book)
and created off-balance sheet shell companies called “Maiden Lane” to take bad
assets off of the ledgers of certain financial institutions, in order to
protect the bondholders of those companies and facilitate their acquisition by
purchasers.
6- Imagine that the crisis continued, and that what
actually ended the crisis was a change in FASB
accounting rules in the second week of March 2009, which relieved the need for
financial institutions to mark their distressed assets to market value, and
instead allowed them “significant judgment” in valuing those assets, instantly
removing the specter of widespread financial insolvencies with the stroke of a
pen.
7-Imagine that legislation following the crisis was heavy on
paper regulation, signed assurances, and living-wills, but was light on
capital requirements, and contained provisions
that essentially tied the hands of the FDIC and instead gave veto power to the
Treasury and the best friend of the banking system, the Federal Reserve Board
itself, in deciding whether a “too-big-to-fail” bank would actually go into
receivership (where bondholders often lose money, but depositors are protected)
if it was to become insolvent.
8-Imagine that in response to the
collapse of a yield-seeking mortgage bubble, a resulting global
financial crisis, and a 55% collapse in the S&P 500, the Federal Reserve
insisted on pursuing more of what created the bubble in the first place;
refusing to admit the weak cause-and-effect relationship between monetary
easing and the real economy, pushing interest rates to zero, and expanding the
monetary base to the point where $4 trillion of
zero-interest hot potatoes constantly had to be held by someone in
the financial markets.
9- Imagine that
despite pursuing this experimentation for years, the response of the
real economy was no
different than could have been predicted using prior values of non-monetary
variables alone.
10-Imagine that the main effect of this unprecedented intervention
was to drive the most reliable measures of stock market valuation (those best
correlated across history with actual subsequent 10-12 year market returns) well beyond double
their historical norms, and that it prompted massive issuance of low-grade, “covenant
lite” debt, in much the same way yield-seeking speculation encouraged the
issuance of low-grade mortgage debt in the preceding bubble.
11 Imagine that
the Fed not only refused to take serious account of the distorting impact of
yield-seeking speculation
on the financial markets, but actually welcomed it, citing it as an example of
the “effectiveness” of quantitative easing, in the appallingly misguided belief
that “wealth” is inherent in the price you pay for a security, rather than in
the long-term stream of cash flows that the security will deliver over time. Imagine
that investors adopted the same overconfidence in a
Fed “put option” that they held before the 2000-2002 and 2007-2009 market
collapses.
12-Imagine the Fed failed to take any steps at all to reduce
the size of its balance sheet at historically low interest rates, and
painted itself into a corner because despite the weak relationship between
short-term interest rates and the real economy, any normalization of policy
threatened to burst a bubble that was already at a precipice.
13-Imagine that as a result of a
massive combined deficit in the government and household sectors after
the housing collapse, corporate profit margins temporarily soared to the
highest level in history (an implication of the
saving-investment identity under assumptions that typically hold in U.S. data).
14- Imagine that because of this temporary elevation of
profit margins, many of the borrowers that issued debt most heavily
during this yield-seeking bubble were companies with elevated short-term
profitability, but more fragile prospects over the full economic cycle.
15- Imagine that energy and mining companies were among these,
but were only the tip of the iceberg, exposed sooner than the rest because of
early weakness in commodity prices.
16- Imagine the collapse of an
extended speculative tech bubble, resulting in a broad economic
recession. Imagine if the Federal
Reserve had persistently slashed short-term interest rates during the downturn,
to no avail, leaving rates at just 1% by the time the S&P 500 had lost half
of its value and the Nasdaq 100 collapsed by 83%.
17 Imagine that the Fed kept rates suppressed, in the
initially well-meaning hope of encouraging lending, growth and employment.
Imagine that the depressed level of interest rates made investors feel starved
for yield, and drove them to look for safe alternatives to Treasury bills.
18 Imagine that
investors found the higher yields they sought in mortgage securities, which had historically always been safe,
and that Fed policy inadvertently created voracious demand for more of that
debt.
19- Imagine Wall Street had weak enough requirements on
capital and underwriting standards that financial institutions had an
incentive to create more “product” by lending to borrowers with lower and lower
creditworthiness.
20-Imagine that by the magic of “financial engineering” and
lax oversight of credit ratings, Wall Street could pass these mortgages off to
investors either directly by bundling, slicing and dicing them into
mortgage-backed securities or by piggy-backing on the good faith and credit of
the government by transferring them to Fannie Mae and Freddie Mac in return for
funds obtained from investors in these “agency” securities.
21- Imagine that this Fed-induced
yield-seeking speculation changed the dynamics of the housing market,
and produced a bubble in home prices, coupled with overbuilding and
malinvestment.
22- Imagine that the
Federal Reserve, focused exclusively on exploiting the very weak links
between monetary policy and its “mandates” of employment and price stability,
ignored the phrase
“long-run” in those mandates, and wholly disregarded the speculative effects of
its actions, which any thoughtful central banker should have viewed as a
significant risk to the long-run economic health of the nation.
23-Imagine that the
then-head of the San Francisco Federal Reserve, Janet Yellen, answered
questions about 1) whether speculative risks existed, 2) whether the Fed had
any role in addressing them, and 3) whether there was any doubt that the Fed
could halt a resulting economic downturn if it occurred, responding with a
dismissive “No, No, and No.”
24 Imagine that this second
speculative bubble collapsed anyway, producing the worst economic
downturn since the Great Depression, and that persistent easing by the Fed
failed to stop any of it, just as it failed to do so during the preceding
collapse.
There are many more imaginations
Now imagine what might happen next.
A side-note. Though I
was one of the few market participants who correctly anticipated the tech and
housing collapses (also adopting a constructive or aggressive investment
outlook following every bear market decline in three decades as a professional
investor, and navigating complete market cycles admirably over that span), I
regularly acknowledge that my 2009 insistence on stress-testing our discipline
against Depression-era data, coupled with a Fed policy focused on intentionally
encouraging financial speculation, inadvertently created an Achilles Heel for
us in the advancing portion of this market cycle. We addressed those challenges
in mid-2014. See the “Box” in The Next Big Short for
the complete narrative.
A few charts
Some of the following charts have appeared in prior
market commentaries, but are presented again below to provide a graphic
overview of the current situation.
That said, MarketCap/GVA, shown below, has a stronger
correlation across history with actual subsequent S&P 500 total
returns than any of a score of alternative measures we’ve examined, including
the Fed Model, price/earnings, price/forward operating earnings, the Shiller
CAPE, Siegel’s NIPA CAPE, Tobin’s Q, price/dividend, and numerous other
metrics.
SEE BIG IMAGE AT: http://www.hussmanfunds.com/wmc/wmc160620a.png
Finally, the chart below shows the median
price/revenue ratio of S&P 500 component stocks, which recently pushed to
the highest level in history, exceeding both the 2000 and 2007 market peaks.
This dispersion has created a headwind for hedged-equity
strategies in U.S. stocks, particularly value-conscious strategies, but investors
should understand that beneath the surface of this short-term outcome is
singularly the most extreme point of overvaluation for the median stock in
history.
GRAPHIC LOCATION AT http://www.hussmanfunds.com/wmc/wmc160620g.png
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POLITICS
For those concerned
that there may be a conflict of interest for US Attorney General Loretta Lynch
as it relates to the Clinton investigation, you can rest at ease. On Sunday,
Lynch promised that there is no conflict of interest, period. In an
interview with Fox News Sunday, Lynch told Chris Wallace that there is nothing
to worry about, even if her boss is openly campaigning
for Clinton to become the next president of the United States.
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ME & WORLD ISSUES
U.S. and Russian fighter jets bloodlessly tangled in the
air over Syria on June 16 as the American pilots tried and failed to stop the
Russians from bombing U.S.-backed rebels in southern Syria near the border with
Jordan. The aerial close encounter underscores just how chaotic Syria’s skies
have become as Russia and the U.S.-led coalition work at cross-purposes, each
dropping bombs in support of separate factions in the five-year-old civil war.
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As
we warned last week was likely, Nigeria's decision to throw in the towel
on maintaining its currency peg has resulted in a collapse in the Naira.
Ending a 16-month-long effort to 'fix' its currency, Nigeria's shift to a free
float has resulted in a 30% crash in the currency as the central bank began
auctioning dollars to try and clear backlogs of orders for hard currency.
However, as the forward market suggests, the pain is far from over as the
hyperinflationary endgame remains more than likely
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- "My 60 years
of experience tells me the pound will plummet, along with your living
standards. The only winners will be speculators" - George Soros
- "All the evidence shows that Brexit would be a disaster" - Jacob Rothschild
- "You cannot in the end protect people from the economic shock that leaving the EU would bring about." - George Osborne
- "All the evidence shows that Brexit would be a disaster" - Jacob Rothschild
- "You cannot in the end protect people from the economic shock that leaving the EU would bring about." - George Osborne
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Mises argues that whenever the state meddles with the free
market, it reduces the standard of living that had prevailed prior to
any state intervention. Essentially, a Brexit will remove another layer of
government intervention from the lives of Brits, and therefore there shouldn’t be any fear of a Brexit. On the
contrary. A Brexit may hold the key to make Europe abandon a doomed course,
bringing it to its senses and back onto the road of freedom and prosperity.
DEMOCRACY NOW
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GLOBAL RESEARCH
By Patrick Martin Global Research, June 20, 2016
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Dirty
“Progressive” Politics, Liberals and “Leftists” for Hillary Clinton. Voters’
only “Rational Choice”: Oppose Both Candidates By Stephen Lendman, Global
Research, June 20, 2016
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COUNTER PUNCH
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Michael Barker Are
You a Racist? Take the EU Test
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Elliot Sperber The
World is a Gas Chamber
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Kathy Kelly Why Go To
Russia?
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INFORMATION CLEARING HOUSE
Western officials “pull the wool over [their news outlets]
eyes,” who in turn misinform their audiences.
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If You
Value Life, Wake Up! By Paul
Craig Roberts
The crazed, insane, nazified, neoconized government in
Washington, is driving the world to extinction in nuclear war
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The State
Department’s Collective Madness. By Robert Parry
These hawks are so eager for more war that they don’t mind
risking a direct conflict with Russia.
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Imprison people and exploit them for cheap labor — often at
50 cents an hour or less.
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The US Is
Sleepwalking Towards A Nuclear Confrontation By Dmitry Orlov
Chris interview Dmitry Orlov this week about the potential
likelihood for actual direct conflict to break out between the world powers
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Before Omar
Mateen Committed Mass Murder, The FBI Tried To 'Lure' Him Into A Terror Plot
By Max Blumenthal, Sarah Lazare
By Max Blumenthal, Sarah Lazare
The FBI dispatched an informant to "lure Omar into some
kind of act and Omar did not bite."
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RT SHOWS
On
contact Kshama
Sawant: How to counter establishment politics Kshama Sawant, the only socialist on the
Seattle City Council. RT Correspondent Anya Parampil reports on the obstacles
third party...
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Keiser Report Episode
929 Max and Stacy discuss
Ronald Reagan’s warning that inflation is as ‘violent as a mugger, as
frightening as an armed robber and as deadly as a hit man,’ yet forgetting to
warn us that so were...
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WASHINGTON BLOG
U.S.
Study Finds Immigrants Imprisoned to Boost Prison-Corporation Profits Posted on June 20, 2016 by Eric Zuesse.
93% of the people who
are locked up in the U.S. in order to meet the minimum legal requirements for
the number of people who must be locked up on possible violations of U.S.
immigration laws, are locked in for-profit prisons,
which are owned by corporations that heavily fund a few politicians, including Hillary Clinton.
That 93% finding was
published on June 20th, in a study by the Center for Constitutional Rights,
titled, “Banking
on Detention: Local Lockup Quotas and the Immigrant Dragnet”.
On 28 April 2015, the
Washington Post published an article, “How for-profit
prisons have become the biggest lobby no one is talking about: Sen. Marco
Rubio is one of the biggest beneficiaries.” It failed to include one crucial
fact: Hillary Clinton is the other.
On 6 October 2015,
Vice News revealed that fact when they headlined “How
Private Prisons Are Profiting from Locking Up US Immigrants”, and showed that Hillary Clinton was by far the top recipient
of funds from Corrections Corporation of America, and that Marco Rubio
was by far the top recipient from the other of the industry’s giants, GEO
Group, and that both candidates had raked in around the same total amounts from
the industry. Furthermore: “The political contributions
are the visible tip of the iceberg of the influence these folks
wield.”
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By Paul Craig Roberts
Great Danger: US-NATO Missiles
Threatening Russia.
For a number of years
I have been warning that the recklessness of a half century ago has reappeared
in spades. The crazed, insane, nazified, neoconized government in Washington
and Washington’s despicable Europeran vassal states, especially the UK,
Germany, and France, are driving the world to extinction in nuclear war. See,
for example, http://www.paulcraigroberts.org/2013/12/14/washington-drives-world-toward-war-paul-craig-roberts
⇒ Keep Reading
⇒ Keep Reading
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NOTICIAS IN SPANISH
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La crisis venezolana y la narrativa
neoliberal. Steve Ellner
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Mujeres condenadas por las
religiones Marcelo Colussi
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Perú. #KeikoNoVa Yorka Gamarra. Ya fue y perdio .. por que pelar gallina?
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US Sanders convoca simpatizantes a continuar
revolución polÃtica David Brooks http://www.jornada.unam.mx/2016/06/17/mundo/025n2mun
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Keiser
report Por qué US. es "excelente caldo
de cultivo para una insurrección" VIDEO: Keiser Report
en español: PolÃticas mortales (E929)
URL https://youtu.be/-PO8Pcsd7jw
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PRESS TV
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I got the impression
that Erdogan is going to be wiped out first
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